Coming Economic/Markets Crash

[Black Hole]

Too bad I didn't notice this thread sooner, I've been watching all this closely for a while. My take is that we are in the early stages of a substantial global market downturn that will affect all sectors.

The causes are numerous, but the biggest factors seem to be keeping rates too low for too long (particularly as inflation ramped up) and too much stimulus resulting in demand exceeding supply. Then when the FED decided to play hardball they hiked rates much too fast, the effects of that are still coming. 

We saw a justifiable market correction for the first half of the year, but what about the rally now? Any indicator you can look at shows an unhealthy economy being drug down by intense inflation, because people are spending money on energy, food, and shelter instead of things. Earnings are coming down, and companies are going to start going under the next few months. When the unemployment numbers jump the FED will pivot but it will be too late and the damage will be done. 

In that sense, I expect the market to go down below its previous lows within the next 3 months with housing correcting further and inflation slowing down. Due to supply constraints inflation may not go down as fast as last time. For housing specifically, there are some factors that make this less bad than the last crash and others that make it worse. I don't think housing can go down too much until people start losing jobs, and we really aren't into the thick of that yet...but I could see an eventual decline of 10-20%. 

[Andie]

[Anti Marine Layer]

If you wanna know the real intentions behind BBB and the so-called Inflation Reduction Act, I recommend you read up on the Great Leap Forward. 

[Anti Marine Layer]

1 hour ago, Andie said:

A heavenly 73*.  High of 94*. 
Dealing with far more normal temps.   
Rain still in forecast of the next week.  
Hoping to see my share.  

What's that gotta do with the economy?

[Andie]

Right. 
 

Has more to do with no coffee yet this morning!!!

[Iceresistance]

The Stock market is very volatile right now, the signals are still very mixed.

[Front Ranger]

The doomer ranks continue to grow: 

https://archive.ph/QMoWn

https://www.cnbc.com/2022/08/24/home-prices-fall-for-the-first-time-in-three-years-biggest-drop-since-2011.html

Now, here's the thing: even if we see a housing correction of 20% in many markets over the next 6-12 months, which I think is very possible, most people who bought prior to 2015 will still be up 75%+, and most who bought from 2015-2019 will still be up 25%-50%.

These things are natural. Just as the irrational exuberance of the last few years has led to a massive crash in crypto and big drop in stocks this year (with no convincing sign we're out of a longer bear market yet), the same is coming for the housing market - it just moves a lot slower than crypto or equities, and doesn't usually see anywhere near as much volatility in prices.

However, given that the 30%+ appreciation in 2 years from 2019-2021 was pretty much unprecedented for the housing market, it's not unreasonable to imagine we may see a faster decline in home values than most previous corrections.

[Black Hole]

Besides the foreclosure backlog, there will be additional foreclosures from job losses down the road assuming this recession has some real teeth. That's the problem with the FED tightening into a recession, you get a bit of a snowball effect. I'd say in 6-12 months it'll likely be obvious that we are in a deep recession and the FED will throw the money printers back on.  

[Andie]

On 8/24/2022 at 6:23 PM, Front Ranger said:

The doomer ranks continue to grow: 

https://archive.ph/QMoWn

https://www.cnbc.com/2022/08/24/home-prices-fall-for-the-first-time-in-three-years-biggest-drop-since-2011.html

Now, here's the thing: even if we see a housing correction of 20% in many markets over the next 6-12 months, which I think is very possible, most people who bought prior to 2015 will still be up 75%+, and most who bought from 2015-2019 will still be up 25%-50%.

These things are natural. Just as the irrational exuberance of the last few years has led to a massive crash in crypto and big drop in stocks this year (with no convincing sign we're out of a longer bear market yet), the same is coming for the housing market - it just moves a lot slower than crypto or equities, and doesn't usually see anywhere near as much volatility in prices.

However, given that the 30%+ appreciation in 2 years from 2019-2021 was pretty much unprecedented for the housing market, it's not unreasonable to imagine we may see a faster decline in home values than most previous corrections.

It’s going to get very bumpy for some folks and I’m sorry for that. A strong working class is the backbone of this country.  
I’m grateful that our house will be paid for the end of 2023.  It’s a good small manageable place built in 2008 almost paid for tucked back on a golf course in an outlying city.  Construction all around us but we’re in a good position.  
I feel so bad for those out of work, overextended, or challenged in some way.  They didn’t ask for it and now struggle.  The recession of ‘08 will likely be seen as less drastic as this one.  
We have to get manufacturing back on US soil.  We can’t just be a nation of consumers.  
The Covid shutdown wrecked people’s incentive to work and be productive. Crime is up as people are out of work or out of incentive/hope.  We need to restart this engine.  And soon. 

[Anti Marine Layer]

[Iceresistance]

1 hour ago, Mr Marine Layer said:

Why was the weather weaponized? To cause a panic?

[Iceresistance]

9 hours ago, Andie said:

It’s going to get very bumpy for some folks and I’m sorry for that. A strong working class is the backbone of this country.  
I’m grateful that our house will be paid for the end of 2023.  It’s a good small manageable place built in 2008 almost paid for tucked back on a golf course in an outlying city.  Construction all around us but we’re in a good position.  
I feel so bad for those out of work, overextended, or challenged in some way.  They didn’t ask for it and now struggle.  The recession of ‘08 will likely be seen as less drastic as this one.  
We have to get manufacturing back on US soil.  We can’t just be a nation of consumers.  
The Covid shutdown wrecked people’s incentive to work and be productive. Crime is up as people are out of work or out of incentive/hope.  We need to restart this engine.  And soon. 

Sadly, there is a trend called "Silent Layoffs". Where they cut jobs without telling anyone much of anything.

[Anti Marine Layer]

3 minutes ago, Iceresistance said:

Why was the weather weaponized? To cause a panic?

They'll probably blame inflation on climate change next.

[Anti Marine Layer]

7 minutes ago, Iceresistance said:

Why was the weather weaponized? To cause a panic?

It says the extra rainfall in the Philippines will damage crops.

[Front Ranger]

Looks pretty clear at this point that the mid summer stock rally was just your typical bear market relief rally, and lower lows are likely to come.

[SilverFallsAndrew]

I bought my home for 187K, closed on it 11 years ago today. Redfin has it at 610K, Zillow 488K. Either way things could drop quite a bit and we would still be in good shape. 

[Deweydog]

2 hours ago, SilverFallsAndrew said:

I bought my home for 187K, closed on it 11 years ago today. Redfin has it at 610K, Zillow 488K. Either way things could drop quite a bit and we would still be in good shape. 

That’s funny.  It’s the opposite for us where Redfin is pretty much in line with market value while Zillow is inflated about 75k.

[Front Ranger]

Per Redfin's data, Denver median sales price has dropped from a peak of $617k earlier this year to $573k. That's a 7.8% drop so far.

https://www.redfin.com/news/data-center/

[Front Ranger]

In real terms (accounting for inflation), the S&P is now down close to 30% YTD, and the NASDAQ over 35%.

[Iceresistance]

I'm surprised that no one has noticed the DOW absolutely SINKING! It closed at 28,725 on Friday

[Front Ranger]

 

[SilverFallsAndrew]

39 minutes ago, Front Ranger said:

 

Why are they assuming no recession? 

[roadtonowhere08]

We are IN a recession.  Not sure why there is denial out there.

[Front Ranger]

24 minutes ago, SilverFallsAndrew said:

Why are they assuming no recession? 

Well, if you read the follow up comments below the post, that's the first scenario. The second scenario assumes a recession and then expected home value drops go to 20% nationally, and 25-30% in especially overvalued markets.

This is the most aggressive "official/expert" forecast I've seen so far.

[SilverFallsAndrew]

25 minutes ago, roadtonowhere08 said:

We are IN a recession.  Not sure why there is denial out there.

Your guy says we are not. But technically yes.

[roadtonowhere08]

Just now, SilverFallsAndrew said:

Your guy says we are not. But technically yes.

I don't have a guy.  But whatever makes you sleep at night.

[SilverFallsAndrew]

23 hours ago, roadtonowhere08 said:

I don't have a guy.  But whatever makes you sleep at night.

Uh huh

[roadtonowhere08]

14 minutes ago, SilverFallsAndrew said:

Uh huh

Like I said, you do you.

[Iceresistance]

The September 2022 Inflation rate is coming out soon for here. 

 

Germany's Inflation rate is above 10%, could this preview that is coming?

[Andie]

I read a report on coming inflation too.   
conservatively 8-8.5%.  
Nauseating.  It’s going to be rough for all of us. Stock up on anything you use regularly and can’t live without.  Might start with toilet paper 

[Iceresistance]

Eggs are above $5 in the Shawnee Walmart. 

[Iceresistance]

On 10/10/2022 at 9:11 PM, Andie said:

I read a report on coming inflation too.   
conservatively 8-8.5%.  
Nauseating.  It’s going to be rough for all of us. Stock up on anything you use regularly and can’t live without.  Might start with toilet paper 

The September 2022 Inflation is higher than expected at 8.2%, CPI has also unexpectedly increased by .4%. 

[SilverFallsAndrew]

On 10/11/2022 at 11:08 AM, Iceresistance said:

Eggs are above $5 in the Shawnee Walmart. 

Glad I have chickens and ducks. We have been getting a couple dozen eggs a day with all this sunny/warm weather. Unless we put a light on them though they won't lay much during the winter. But for now us and our family and friends are flush with eggs. 

[Iceresistance]

Just found out that my grandmother invests in the stock market, and I would like to have someone to keep a sharp eye on it. 

[roadtonowhere08]

43 minutes ago, Iceresistance said:

Just found out that my grandmother invests in the stock market, and I would like to have someone to keep a sharp eye on it. 

You mean you do not trust her?  If you convince her to put it in an S&P index fund like VOO or VOOG and leave it there, it is about as foolproof as possible.  And if she is sitting on cash waiting, it is a GREAT time to get in.  People run into trouble when they pick stocks (since that requires research) or they delude themselves into thinking they can be a stock trader.

[Iceresistance]

44 minutes ago, roadtonowhere08 said:

You mean you do not trust her?  If you convince her to put it in an S&P index fund like VOO or VOOG and leave it there, it is about as foolproof as possible.  And if she is sitting on cash waiting, it is a GREAT time to get in.  People run into trouble when they pick stocks (since that requires research) or they delude themselves into thinking they can be a stock trader.

Not that. It's something else, how can you make money without doing stupid stuff?

[roadtonowhere08]

14 minutes ago, Iceresistance said:

Not that. It's something else, how can you make money without doing stupid stuff?

Not sure I follow.  Elaborate.

[Iceresistance]

Just now, roadtonowhere08 said:

Not sure I follow.  Elaborate.

She is investing in the Dow Jones, and she lost a LOT of money during the selloff Friday. 

[roadtonowhere08]

11 minutes ago, Iceresistance said:

She is investing in the Dow Jones, and she lost a LOT of money during the selloff Friday. 

Ah gotcha.  Okay, investing in the Dow is not necessarily bad, but the S&P is a better index with better returns.  It's more modern with more of a modern balance of stocks.  As far as the selloffs go, it is the nature of the beast.  They will happen. 

Some perspective:

Investing in stocks only works if you give them time as the image above shows.  If your grandmother has been at this a while and has stayed the course, she has probably made a bundle of money.  If you are worried about the last selloff and my last sentence is the case, she'll be fine.

[Front Ranger]

We've had to lay off two people on my company team so far. The worst is yet ahead.

https://markets.businessinsider.com/news/stocks/home-prices-housing-crash-fall-jeremy-siegel-paul-krugman-bubble-2022-10